What was Brady Brothers cash basis income? Cash basis income: $6,000 (cash received) - $5,000 (cash paid) = Answer: $1,000 Question 3: What was Brady Brothers accrual basis income? Accrual basis income: $12,000 (revenue earned) - $8,000 (expenses incurred) = Answer: $4,000 Question 4: Anderson Company’s balance sheet at the end of the year revealed the following information: Clients owe Anderson Company $35,300 for completed projects. Anderson Company owns office equipment totaling $95,500. Anderson Company owns $5,000 of material used on various client projects.
Sales units Sales Selling price: $250 100,000 400 Selling price: $250(0.1)= $275 137500 Variable cost: $160 variable cost: $160 Fixed cost: 22500 Fixed cost: 22,500(0.1)= 24750 1. Compute the company’s current break-even point in units and dollars? Break even Units: Fixed expense/CMUnit 22500/90 = 250 CM: 250-160= 90 Dollars: Fixed expense/ Cm ratio 22500/.36= $62500 CM Ratio: units 90/ $250 selling price = .36 2. What is the company’s current margin of safety in Units, dollars and percentage? Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted.
Given: wages, salaries, and fringe benefits = $5 trillion; profits = $400 billion; interest = $300 billion; rent = $100 billion; and depreciation = $700 billion. How much is National Income? 7. Given: wages, salaries, and fringe benefits = $5.7 trillion; profits = $500 billion; interest = $250 billion; rent = $150 billion; and indirect business taxes = $400 billion. How much is National Income?
Valuation Questions Question 1 Union Pacific Railroad reported net income of $770 million in 1993, after interest expenses of $320 million. (The corporate tax rate was 36%.) It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The firm also had $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from $3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion.
(a) The issuance of the bonds. Divac(1) Cash $300,000 Bonds Payable $300,000 Verbitsky(2) Cash 204,000 Bonds Payable 204,000 Interest Expense 4,000 (200,000 x .12 x 2/12) (b) The payment of interest on July 1. (1)Interest Expense 13,500 (300000 x .09 x ½) Cash 13,500 (2)Interest Expense 12,000 (200000 x .12 x ½) Cash 12,000 (c) The accrual of interest on December 31. (1)Interest Expense 40,000 Interest Payable 40,000 (2)Interest Expense 13,500 Interest Payable 13,500 E14-7 (Amortization Schedules—Straight-Line) Spencer Company sells 10% bonds having a maturity value of $3,000,000 for $2,783,724. The bonds are dated January 1, 2012, and mature January 1, 2017.
Dividends _____. represent an expense and are an operating activity represent an obligation and are an operating activity represent a distribution of earnings and are a financing activity represent an asset and are an investing activity 3. Below is a partial list of account balances for LBJ Company: Cash $15,000 Prepaid insurance 5,000 Accounts receivable 2,500 Accounts payable 3,000 Notes payable 6,000 Common stock 10,000 Dividends 500 Revenues 15,000 Expenses 13,000 What did LBJ Company show as total debits? $34,000 $36,000 $70,000 $31,000 4. Under the accrual basis of accounting, revenues are recorded and reported _____.
Net income rose from ($8,000) to ($2,000) which cut losses by $6,000. Losses were cut by 75%. 2. A firm needs $800 to start and has the following expectations: Sales $1,600 Expenses $1,450 Tax rate 33% of earnings a. What are earnings if the owners invest (use their own money) for the $800 needed to start?
FI 515 Homework week 2. 3-1 Days Sales Outstanding Days sales outstanding= receivables/ave sales per day= receivables/annual sales/365) 20 days x $20,000= $400,000 3-2 Debt Ratio Debt ratio formula=Debt ratio +equity ratio=1 Equity ratio = 1/EM….the equity multiplier is 2.5 1 / 2.5 = .40 equity ratio Debt ratio= debt ratio +equity ratio=1 1-equity ratio=debt ratio 1-.40=.60%=debt ratio 3-3 Market/Book Ratio Market value per share =$75 Common equity =6 billion Number of shares outstanding =800M Market value per share/ (common equity/# of shares outstanding)= market/book ratio $75/(6,000,000/800,000,000) = $75/7.5 10 billion= market to book ratio 3-4 PE Ratio Price per share/earnings per share= P/E Price per share/cash flow per share= Price/cash flow
E6-4 (Computation of Future Values and Present Values) (a) What is the future value of 20 periodic payments of $5,000 each made at the beginning of each period and compounded at 8%? The future value of 20 periodic payments of $5,000 a period at 8% is: $247,114.58 or $247,115 Interest = 8% $5,000 x 45.76196 = $228,809.80 Period = 20 $228,809.80 x 1.08= $247,114.58 (b) What is the present value of $2,500 to be received at the beginning of each of 30 periods, discounted at 10% compound interest? The present value of $2,500 for 30 periods at 10% is: $25,924 Interest = 10% $2,500 x 9.42691 = $23,567.28 Period = 30 $23,567.28 x 1.10= $25,924.008 (c) What is the future value of 15 deposits of $2,000 each made at the beginning of each
Notes Payable | 12000 | | Interest Payable | 9000 | | Total Current Liabilities | 58500 | | Long Term Liabilities | | | Notes Payable | 28000 | | Total Liabilities | | 86500 | Stockholder's Equity | | | Common Stock | 205500 | | Retained Earnings - December 31 | 97400 | | Total Stockholder's Equity | | 302900 | Total Liabilities & Stockholder's Equity | | 389400 | Elker Fashions Incorporated Closing Entries For Year Ended December 31, 2008 Date | Account Title & Explanation | Debit | Credit | 31-Dec | Merchandise Inventory - December 31 | 80000 | | | Sales | 865800 | | | Purchase Discounts | 16400 | | | Income Summary | | 962200 | | (To record ending inventory and close accounts with credit balances) | | | | | | | 31-Dec | Income Summary | 860100 | | | Depreciation Expense - Buildings | | 12000 | | Depreciation Expense - Equipment | | 10000 | | Gas & Oil Expense | | 7600 | | Salary Expense | | 70700 | | Utilities Expense | | 11400 | | Repair Expense | | 5900 | | Insurance Expense | | 3500 | | Sales Discounts | | 6100 | | Purchases | | 720000